Risk is the main problem that every investor faces. All investments involve some risk; according to Upkeep Media Inc., our lack of certainty over what will occur in the future generates that danger. If you could foretell the future, investing would be simple since you wouldn’t ever have to make another unsuccessful investment.
But since the future is unpredictable, we must keep working for a brighter tomorrow by making prudent financial decisions. What, therefore, is the best alternative to foreseeing the future? The solution is to be able to analyze both current events and historical events critically in order to predict where current trends may go.
That is precisely what we will do in this article for the real estate sector in 2023. We spoke with seasoned real estate professionals to gather their predictions for the housing market in 2023 based on what they observe in the current market. These five significant real estate trends for 2023 are a distillation of that information.
1. Increase in contactless real estate transactions
The housing industry is experiencing the same phenomenon that has been occurring in other sectors where every work is now completed online. Certain procedures for purchasing or renting a home that were formerly conducted in person and on paper have been digitalized.
These modifications were a convenience and cost-saving measure prior to COVID-19. However, more elements of the home-hunting process have gone digital since 2020. This time, self-preservation and necessity are the driving forces behind the modifications. Although the worst of the pandemic worst has passed, the digitization of the real estate sector is speeding up rather than slowing.
Since a portion of the mortgage application process is being done online, virtual staging, 3D virtual tours, and drone films are in higher demand. In 2023, this trend is anticipated to intensify.
2. Continuing movement to the suburbs
People will keep leaving the city and relocating to the suburbs in greater numbers. Although it started before the pandemic, this trend mostly remained unnoticed. Most people who moved did so because it suited their lifestyle. As the virus spread and social isolation became the norm, more individuals began to favor the wide-open expanses of the suburbs over the congested city streets.
For financial reasons, a lot of people are moving. They are driven to more affordable housing options in the suburbs since they can no longer afford to live in the city after losing their jobs. Those who can afford to are also relocating to the outskirts to escape the city’s constraints while avoiding exposure to illness. For the next three to five years, cities will probably continue to empty.
3. Shortage of single-family houses
As more people live in the suburbs, demand for single-family houses rises. Record-low mortgage rates are still in effect and are encouraging more individuals to become homeowners, exerting additional pressure on the available housing supply. In addition, demand for multi-family housing is declining as more families want to live independently of one another.
At the same time, the economics of the suburbs makes it undesirable for real estate developers and investors to construct multifamily complexes there. Millions of Millennials are becoming first-time homeowners as all of this is taking place. It is anticipated that the housing deficit would normalize, but that is unlikely to happen until beyond 2023.
4. Increase in home prices
This is fundamental economics; there are currently more purchasers than there are available homes to buy due to the demand for homes outstripping the supply. As a result, the costs of available properties are skyrocketing. In the majority of the nation, a seller’s market has existed since 2021.
After a period of initial pricing slump brought on by the epidemic, this trend started in late 2020. After then, prices quickly rose again and have been increasing ever since. Contrary to what many observers anticipated, customers were not deterred by this exorbitant pricing.
Buyers frequently make offers above the asking price to fend off competition from other purchasers, leading to greater property prices instead of waiting to see if prices would decline. This trend will remain through 2023 as long as there is a shortage of single-family houses on the market.
5. Upsets in the rental property market
The housing market is interrelated; developments in one location have an impact on other areas. The market for rental assets in urban areas (mostly commercial real estate) will continue to decline as more people move to the suburbs. Family members are relocating together as a result of so many people losing their jobs and so many businesses closing their doors.
On the other hand, as more people relocate to mid-sized and smaller cities from larger ones, there is an increase in demand for rental housing. As the e-commerce boom continues, several office buildings are now being turned into warehouses. After 2023, these patterns are anticipated to continue.
How can you benefit from these developments as a knowledgeable real estate investor? There are several options for doing that. For instance, you can purchase rental homes in urban regions at reduced costs in anticipation of when people start moving back to the city. You only need to hunt for them in order to find numerous possibilities to profit from the next property market.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.